Following termination or expiration of the Hardees franchise, what are the geographic limits of the non-competition covenant?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Franchise Agreement | Summary |
|---|---|---|
| applicable cure period on any real estate lease, equipment lease or financing instrument relating to the Franchised Restaurant or with any vendor or supplier to the Franchised Restaurant; signed release; transferee must complete training; transfer fee paid; agreements signed; remodeling, maintenance and facility upgrades to modernize Franchised Restaurant to current image; and compliance by transferee and its affiliates with all development and franchise agreements with us or our affiliates. | ||
| n. Our right of first refusal to | Section 18.J. | We or our designee can match any offer for your business. |
| acquire your business | ||
| o. Our option to purchase your business | Section 23 | We can purchase some or all of your assets upon expiration or earlier termination of the Franchise Agreement at a price agreed upon or set by appraisers. In addition, if you purchase an existing company-operated Restaurant and enter into a Development Agreement with us, we will have the right to repurchase the Restaurants then developed by you under the Development Agreement and/or the Restaurants that you purchased from us if you fail to comply with certain development obligations in a timely manner. |
| p. Your death or disability | Section 18.G.(1)(b) | Transfer to your spouse, children, parents, sibling or a member of the Continuity Group is allowed. |
| q. Noncompetition covenants during the term of the franchise | Section 20.C. | Except with our consent – no diversion of any business or customer to any competitor; no interest in any restaurant business or sale of real property to a restaurant business whose sales of Designated Entrée Items during any daypart are reasonably likely to account collectively for 20% or more of the restaurant's sales of all entrée items during that daypart, that features or promotes any Designated Entrée Item in its advertising, or that operates in a quick-service format (with or without table service). "Designated Entrée Items" means any hamburger sandwich, chicken sandwich, breakfast sandwich and any other entrée item of a type designated by us as part of the System at any time during the term of the Franchise Agreement. |
| r. Noncompetition covenants after | Section 20.C. | No activity as described in paragraph q. above for 2 years |
| the franchise is terminated or | within a 2-mile radius of the Franchised Location or within a | |
| expires | 2-mile radius of any then-existing Hardee's Restaurant. | |
| s. Modification of the agreement | Section 29 | No modification generally without signed agreement, but HR may modify the Hardee's System and the OPM. |
| t. Integration/merger clause | Section 29 | Only the terms of the Franchise Agreement, the OPM, the documents referred to in and the attachments to the Franchise Agreement are binding. Any other oral or written promises related to the subject matter of the Franchise Agreement may not be enforceable. |
Source: Item 17 — Renewal, Termination, Transfer, and Dispute Resolution (FDD pages 64–69)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, after the franchise is terminated or expires, a franchisee is restricted from engaging in activities similar to those during the franchise term. Specifically, the franchisee cannot have an interest in or be involved with a restaurant business that features or promotes certain "Designated Entrée Items" (such as hamburger sandwiches, chicken sandwiches, and breakfast sandwiches) if those items account for 20% or more of the restaurant's sales during any daypart. This restriction applies for a period of 2 years.
The geographic scope of this non-compete agreement extends to a 2-mile radius around the former Hardees location and also within a 2-mile radius of any other existing Hardees restaurant. This means a former franchisee cannot operate or be involved with a competing restaurant within these specified zones.
This non-compete clause is fairly standard in the franchise industry, as it protects Hardees's market share and brand recognition. However, the 2-mile radius could significantly limit a former franchisee's options, especially in densely populated areas or areas with multiple Hardees locations. Prospective franchisees should carefully consider this restriction and its potential impact on their future business ventures before investing in a Hardees franchise.